Technology

Dish TV's net loss continues to shrink, Q1 rev up 6.3%

MUMBAI: India‘s leading DTH operator, Dish TV, is on course to swing into net profit this fiscal as its first-quarter operating margin continues to improve, subscriber growth stays strong and outlook on ARPU (average revenue per user) elevation is bullish.


The net loss is narrowing for the last five quarters after rising to Rs 631.8 million for the three-month period ended June 2010 compared to Rs 597.73 million in the trailing quarter.


"Net loss continues with its downward trend, making bottom line profitability visible in the coming quarters," says Dish TV managing director Jawahar Goel.


For the three months ended June 2011, net loss narrowed to Rs 183 million, as against Rs 371 million in the preceding quarter.


Shares of Dish TV, however, fell 4.45 per cent to close Wednesday at Rs 89.05, possibly reacting to a marginal increase in the customer drop-out rate. The churn rate rose to 1.1 per cent compared to 1 per cent in the trailing quarter.


"Churn recorded a marginal upward movement, largely due to subscriber inactivity post the cricket World Cup 2011," says Goel.


Media analysts feel the churn rate, which has stayed below one per cent most of the time, could be influenced by a price hike that Dish TV had injected on its set-top boxes. Dish TV calculates its churn rate based on customers who have stopped paying for 120 days.


Dish TV‘s operating revenue rose 6.3 per cent to Rs 4.60 billion, somewhat lower than the market expectations. While subscription revenue accounted for Rs 3.92 billion, lease rental earned Rs 550 million and teleport Rs 30 million. The remaining came from bandwidth charges. 
 
"Subscription revenue grew stronger at eight per cent. The first quarter is always soft. And this time, it followed the cricket World Cup, which was big. We see subsequent quarters picking up," says Dish TV chief executive officer RC Venkateish.


ARPU has stayed flat at Rs 150 but the company sticks to its guidance of Rs 160-165 for the year.


"The ARPU went up from Rs 142 to Rs 150 for the fourth-quarter, which coincided with the cricket World Cup. There was a la carte uptake because of the sports pack. We have maintained this ARPU in the immediate quarter after the World Cup. We see ARPU growing again and should progressively fall in the region of Rs 160-165," says Venkateish.


Dish TV added 725,000 subscribers during the quarter to take its total base to 11.2 million (gross). The net subscriber base of the market leader stands at 8.9 million.


"We are on target with our subscriber growth. We should add 3-3.5 million subscribers this fiscal," says Venkateish. 
 
Dish TV‘s average subscriber acquisition cost (SAC) stands at a historical low of Rs 2,058.


"This could further slide in the next quarter. We had introduced the second rate hike on our set-top boxes in July. Our first rate hike got captured in our first-quarter performance," says Venkateish.


Dish TV has controlled its expenses during the quarter which stood at Rs 3.48 billion, from Rs 3.43 billion in the previous quarter. This was due to a cut in commissioning and marketing expenses. The interest burden also softened due to the gains it got from restructuring rupee to foreign currency loan.


The company‘s Ebitda stands at Rs 1.12 billion, up from Rs 901 million in the preceding quarter.


"The key operating metrics continued to be in line with expectations. Subscriber acquisition cost for the quarter was down to Rs 2,058. Arpu remained steady at Rs 150 despite a higher subscriber base. The Ebitda margin further strengthened to reach 24.4 per cent," says Goel.

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